ABSTRACT
The Europe of the mid-1990s is much different from the Europe of the mid-1980s that saw the launch of the European Community's 1992 program. Fundamental changes in the economic and political landscape of Western Europe have altered the setting in which integration efforts have been undertaken, thereby affecting the process of and prospects for European integration. The countries of Central and Eastern Europe, which had hitherto figured only marginally in the activities and policies of the European Union (EU), have become a major object of EU attention and concern. Inside the EU the major development of recent years was the sharp economic downturn of the early 1990s, in which Europe experienced one of its most severe recessions since the end of the World War II. While the economic situation in the EU reflects in part the economic effects of developments elsewhere in the world, the collapse of the exchange rate mechanism (ERM) was essentially an internal event.
